China’s Bold Trade Move Rescues African Economies
Geneva: The United States’ decision to extend a 90-day pause on import tax hikes until 1 August 2025 has plunged the global economy into deeper uncertainty, with the poorest nations bearing the brunt, warned Pamela Coke-Hamilton, head of the International Trade Centre (ITC). She said today that the US move prolongs instability, shaking business confidence, stalling long-term investments, and threatening livelihoods in vulnerable economies.
Amid this gloom, she noted that China’s bold announcement of full tariff-free access for African exports emerges as a beacon of hope, offering a transformative opportunity for developing nations, particularly in Africa, to navigate the turbulent global trade landscape.
Coke-Hamilton, addressing the press, voiced alarm over the US policy’s real-world consequences, especially for least developed countries facing punishing tariff rates of 40 to 50 per cent. Nations like Lesotho, Lao PDR, Madagascar, and Myanmar are staring at economic hardship, with entire industries and jobs at risk. Lesotho, a small southern African nation, exemplifies the crisis. With nearly 60 per cent of its apparel exports heading to the US, it faces a potential 50 per cent tariff next month. Major textile and apparel carriers have frozen investments, jeopardising fears for the future of Lesotho’s top industry, which could see tens of thousands of jobs vanish. Businesses, unable to predict export or import costs, are paralysed, Coke-Hamilton noted, highlighting how this uncertainty cripples planning and investment.
Compounding the tariff threat is a looming slash in global development aid. Quoting Oxfam data, Coke-Hamilton revealed that G7 nations, which account for three-quarters of official development assistance, plan to cut aid spending by 28 per cent next year compared to 2024—the steepest reduction since the G7’s inception 50 years ago. This dual shock of tariffs and aid cuts is brewing a perfect storm for developing countries, pushing them towards economic precarity.
The US economy itself may not escape unscathed, with Coke-Hamilton cautioning of negative long-term impacts from prolonged uncertainty. While short-term effects may be muted for the world’s largest economy, the absence of a clear strategy raises doubts about the policy’s viability. She admitted uncertainty about the US’s long-term plan, noting that no clear win is visible from her perspective.
Yet, in this challenging landscape, China’s game-changing move to grant full tariff-free access to African exports stands out as a monumental development. Coke-Hamilton described it as a “major, major, major” shift, capable of reshaping global trade dynamics in ways unforeseen just three months ago. This policy opens a vital lifeline for African nations, enabling them to pivot towards a reliable trade partner and reduce dependence on volatile markets like the US. For countries reeling from the threat of US tariffs, China’s initiative offers a chance to stabilise economies, boost exports, and kindle hope for sustainable growth.
Coke-Hamilton also sees broader opportunities for developing nations to turn crisis into progress. By investing in regional value chains, countries can build resilience. The African Continental Free Trade Area, for instance, holds immense promise. If intra-African trade, currently at 14 to 16 per cent, climbs to 40 or 50 per cent, it could revolutionise the continent’s economy, complementing China’s tariff-free access. Similarly, shifting from commodity dependence to higher-value exports could unlock significant potential, with the ITC estimating that 43 per cent of least developed countries’ manufacturing export capacity—worth $109 billion by 2029—remains untapped.
The US tariffs, while disruptive, may spur long-overdue decisions, pushing nations towards diversification, regional integration, and new markets like China. For developing countries, these shifts could foster self-reliance, reducing reliance on unpredictable global trade systems. China’s tariff-free policy, in particular, positions it as a pivotal player in supporting African economies, offering a counterbalance to Western trade uncertainties. As the world grapples with these changes, the choices made now—bolstered by China’s forward-thinking move—could redefine global trade, steering vulnerable nations towards resilience and prosperity.
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– global bihari bureau
